COVID-19 has led to some very unique measures on the part of the US government. With $1,200 stimulus checks and increased unemployment benefits, it is no wonder that student loans got worked on. The current measures regarding student debt include a zero-interest period. So, there are a couple things this could mean for you. As a result of these measures, one could actually suspend loan payments completely for the duration of this benefit. This will help you save up an emergency fund for times like these. On the other hand, you could take the opportunity to pay straight out of the principle of the loan, decreasing the interest you’ll be charged afterward. Both seem to be pretty smart choices, so we will dive into a video to discuss what is best.
In Summary
It largely depends on your situation. as with most financial decisions, your current debts and assets will change the answer. If you have a lot of other high-interest debt, it will probably pay off to get rid of some. Not only that, but if you have no savings, now is a great example of a time where they would have come in handy. SO, if either apply to you, you should probably suspend and save. If you are otherwise debt-free and have decent savings, you may benefit from reducing the principle on your loan. Doing this could save you a decent chunk of change in the long run on interest, and could help you prepare better for the future.
I hope this video helped you make your decision. The primary focus right now should be your financial security, so don’t worry as much about gains in a time like this. While many people may be able to score big in stocks right now, you can still count yourself lucky if you only come out of this with what you had before. Not very many people will be able to say the same.
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